Cash Back At Closing
Are there any banks that allow a buyer to get cash back at closing? Lets say I am purchasing a duplex for 60,000, would a bank allow me to receive 6,000 cash at closing if the seller agreed to do this?
Depends on the banker. You usually can if the property value is lets say 65k or higher. But if it's worth 30 grand appraised then lender will probaly not do it. Just tell them the truth and that you want the 6k back for tfees and minor rehabbing and they will lend it to you. People do it all the time when I sell a house for them.
I have been told before that this is possible and then I have been told by few mortgage brokers and realtors that it is illegal or not possible to do. Whey would they tell me this? Who knows
I think I worded this wrong. Actually what I meant to say was do banks allow the seller to give cash back at closing? If I wanted to purchase a property at 60,000, would the bank allow the seller to give me cash of 6,000 at closing, so I would actually be buying the property for 54,000.
I'm a newbie, so maybe I'm missing something - but sounds fine to me. This person sold the property for 60K and the bank approved the loan. What that person does with the money when they're finished it up to them - give it to you, buy a car, toss it in a fire... Maybe doing that at the closing table might be bad form, but I can't see anything wrong with it.
Well the way you worded it all it sure does sound quite simple and it sounds like it shouldn't be a problem. Hopefully I can get this to work this way. If I can, there are so many more deals out there looking good.
Buyers cannot get cash back at closing in Texas. I believe it is different in different states. I'm in the process of closing on a rental property now, and I've been told this a lot recently. I wanted to roll in some repair costs. I can only do this by increasing the sales price and having the seller pay for these repairs, and only by having the title company write a check directly to the contractor at closing. No checks can be written to me at all. Any repairs I want to do myself either cannot be rolled into the loan, or I must work out a personal arrangement with the seller that no one knows about.
Becky
It is my understanding that a buyer CAN NOT get cash back at the closing. If the numbers are manipulated makinging look like the property sold for 60, that would be fraud.
There would have to be a seperate loan for rehabbing.
When I was selling a house, the buyer wanted me to raise the price on paper, then for me to write a check for the difference, hence giving him the xtra for rehabbing. After looking in to it, it is a big no-no :-o
I think it just depends on the state and the bank. The bank I went though allows up to 6% cash back and the Builder I bought my house from was advertising $5000 back at closing I didn't reach my 6% so I added in $ for a washer/dryer & mini blinds....
I've received cash back at closing before, sorta.
I recently purchased a duplex with 100% financing. The lender approved of the seller giving me up to 3% of the price back at closing. The seller and I originally were going to do more then that back at closing but the lender would not allow it. This amount covered my closing costs. I had to bring almost nothing to the closing to buy the property.
I’m new at this, but from questions I asked while doing that deal I believe the 3% cap on seller contributions is common.
That's what I've seen too...my bank's standard is 3%, unless it is less than 80% LTV then you can go to 6%
I wish I could find 100% financing on duplexes. Have had a hard time finding that. The best I can come up with is 10% down for duplexes. Guess I better continue my search.
Let me know fi you find it!...(at decent rates)
Mine was through Homecomings Financial (GMAC). It is at 8%.
I also have received cash back, well I'l in escrow to close next week, but I got 100% financing for a fourplex through a bank, seller paid closing, then paid me enough to settle a debt and pay off my car all through the closing at escrow.
Ok, anyone up for the truth? I'm a loan officer in Texas and I can tell you that it doesn't matter where u are at. Mortgage lenders go by Fannie and Freddie guidelines. However, if you go to your local banker they may work w/ you differently. It's illegal for a seller to give a buyer money back at closing, period! However, there is a legal way to set up an escrow acct. for rehab funds that is made a part of your new loan, this way it leaves the seller out of the equation. Typically the seller can contribute towards buyers c.c., but usually only 2% on investment deals, and 3-6% on primary residences. A buyer can get money back for things that they paid in advance, like appraisal, credit report, application fee, etc. Anything under the table between u and seller should be kept secret. It's merely a trust factor between the 2 of you if you want to get money back from raising the sales price. I can do investment loans in TX on duplexes and fourplexes @ 100%. Of courses rates are higher, but you need great FICO scores to be approved. Hope this helps.
I have received some cash at closing by calling it "carpeting allowance" or "allowance for repairs"
I have also gotten large amounts after the close in the form of very low interest rate loans from the seller. These are secured by mortgages (or deeds of trust) on the property.[ Edited by edmeyer on Date 01/18/2005 ]
ColinI22, can you tell me what bank you went through to get 100% financing on a four-plex? Thanks.
Dumdido
I just called GMAC financing and they do not do duplexes at 100%. He told me 20%. Are you living in the duplex because he said absolutely no 100% on investment purchases.
try homescoming financial - they use GMAC and yes they do 100% financing - I have 2.
Of course you need to have the credit score, cash reserves and job to qualify.[ Edited by hoober on Date 02/17/2005 ]
Its usually called Seller Concessions, and can range from 3%-7% depending on the lender, and property type. The two lenders that I use for 100% NOO properties allows 3% seller concessions. This can either cover closing costs, or allow the buyer to receive cash at closing, or a combination of both.
You need to be careful with Homecomings. I had a deal set up with them just a couple months ago for 100% financing on a 2 unit. Loan officer and loan docs received at home stated CLEARLY there would be no prepayment penalty. Loan docs at settlement table stipulated a stiff prepayment penalty--6 mos. interest in first 3 years. Not acceptable for my purposes and with the rate I was to pay. I walked away at settlement and was able to make the deal work with a personal loan. Cost me a lot of time and headache.
Just be sure to read those closing docs carefully!
Cash at Close
has a nice ring to it.
if it were that easy everone would do it. very few get rich quick deals out there
John